Don Quixote Note: The following is part of a weekly newsletter that BDO Dunwoody sends out to people on their e-mail list and adds credence to my month long struggle for answers from both the Federal Leaders as well as the Provincial ones on the charging of GST on the Provincial Carbon Tax.. I intend to forward this on to all the leaders etc. who haven't replied to my original two e-mails on this subject. (Emphasis in message below are mine.)
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BDO Dunwoody Special Announcement: BC Carbon Tax - Is it really revenue neutral
One cannot hear a provincial politician mention BC's new Carbon Tax without hearing the mantra-like recitation of the phrase revenue-neutral" preceding it. While the provincial government may indeed be returning to BC taxpayers every cent it collects as Carbon Tax, that does not make the tax "revenue-neutral" to you the ultimate consumer.
The reason is simple: the Federal government charges GST on the Carbon Tax.
The BC government estimates that the Carbon Tax will bring in approximately $1.85 billion over three years. If those estimates are accurate, GST of over $92 million will also be levied by the Federal government. Some (but certainly not all) businesses can recover this GST as in input tax credit, but consumers cannot. Schools, universities, hospitals, charities, and non-profit organizations will also be paying additional GST that cannot be recovered.
If, as has been estimated, individuals will be paying 1/3 of the Carbon Tax assessed, that means that a minimum of $30 million will flow out of BC and into the Federal treasury on account of GST charged on the Carbon Tax over the initial 3 year period. This estimate does not factor in the aforementioned schools, universities, hospitals, charities and non-profit organizations, which will certainly account for millions more.
Was this intentional? Not likely. Pursuant to Federal legislation, only PST, Hotel Room Tax and Property Transfer Tax are not subject to GST. Any taxes under new provincial statutes are subject to GST by default.
Can the BC government do anything about it? Doubtful. This is the result of Federal legislation over which the province has no control. What would it take to fix it? The Federal government would have to make a change to the Taxes, Duties and Fees (GST/HST) Regulations to specifically exclude BC's Carbon Tax from the GST regime. You might want to make this friendly suggestion to your Member of Parliament whilst he/she is on the barbeque circuit this summer.
1 comment:
I think you should add to the $92 million pillaged by the Feds the cost of collecting the $1.85 billion and then dispensing the collected money to the taxpayers. This is the biggest boondoggle invented by our politicians in the name of environmental protection. I write it off to cutbacks to education during their schooling. Obviously, they don't know math.
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